WASHINGTON - President Bush, standing before Congress one last time, urged the nation Monday night to stay confident against gnawing recession fears and be patient with the grinding war in Iraq.

Terence Hunt - AP White House Correspondent

Monday

Jan 28, 2008 at 12:01 AMJan 28, 2008 at 5:00 PM

"We can all see that growth is slowing," Bush said in a blunt acknowledgment of rising food and gas prices, increasing unemployment and turmoil in the housing and financial markets.

"We have unfinished business before us, and the American people expect us to get it done," Bush declared. It was his final State of the Union address and he faced a hostile, Democratic-led Congress eager for the end of his term next January.

With his approval rating near its all-time low, Bush lacked the political clout to push bold ideas and he didn't try. He called on lawmakers to urgently approve a $150 billion plan - worked out with House leaders - to stave off recession through tax rebates for families and incentives for businesses to invest in new plants and equipment.

"The actions of the 110th Congress will affect the security and prosperity of our nation long after this session has ended," the president said.

Senate Democrats want to expand the economic rescue plan with rebates for senior citizens living off Social Security and extensions of unemployment benefits for the jobless. Bush said those changes "would delay it or derail it and neither option is acceptable."

He also pushed Congress to extend his tax cuts, which are to expire in 2010, and said allowing them to lapse would mean higher tax bills for 116 million American taxpayers. For those who say they're willing to pay more, Bush said, "I welcome their enthusiasm, and I am pleased to report that the IRS accepts both checks and money orders."

Before speaking, Bush turned to shake hands with a smiling House Speaker Nancy Pelosi and Vice President Dick Cheney, seated behind him. Bush's wife, Laura, and their twin daughters, Barbara and Jenna, sat in a VIP box.

Since the 2003 invasion of Iraq, the war has been a main topic of Bush's annual addresses to Congress. He said Monday night the buildup of 30,000 U.S. troops and an increase in Iraqi forces "have achieved results few of us could have imagined just one year ago."

"Some may deny the surge is working," Bush said, "but among the terrorists there is no doubt. Al-Qaida is on the run in Iraq and this enemy will be defeated."

Bush made no commitment about withdrawing additional troops from Iraq, and he said Gen. David Patraeus, the top U.S. general there, has warned that pulling Americans out too quickly could undermine Iraqi forces, allow al-Qaida to regroup and trigger an increase in violence.

"Members of Congress: Having come so far and achieved so much, we must not allow this to happen," the president said.

Bush said U.S. adversaries in Iraq have been hit hard, though "they are not yet defeated and we can still expect tough fighting ahead."

There are 158,000 U.S. troops in Iraq, a number that is expected to drop to 135,000 by July. There are 28,000 in Afghanistan, the highest number of the war, which began there in October 2001. Congress, despite repeated attempts, has been unable to force troop withdrawals or deadlines for pullbacks, and Iraq has receded as an issue in Washington.

Aides had said Bush would not use the address as a summation of his time in office. But he did, turning to the phrase "over the past seven years" when talking about some of the most-prized efforts of his administration: tax relief, federal involvement with religious charities, the global freedom agenda and increased funding for veterans.

The rhetorical device that held the speech together was trust in people - taxpayers, homeowners, medical researchers, doctors and patients, students, workers, energy entrepreneurs and others - to drive their own success and that of the country. The unspoken message: Government isn't the answer.

"In all we do, we must trust in the ability of free people to make wise decisions, and empower them to improve their lives and their futures," Bush said.

A major challenge for Bush in his address was simply being heard when many Americans already are looking beyond him to the next president.

His speech came hours before Florida's presidential primary election and just eight days before Super Tuesday when voters in more than 20 states go to the polls on the biggest day of the primary campaign. Republicans running for president rarely mention Bush, preferring to focus on conservative hero Ronald Reagan instead.

Bush will turn from Monday's speech and plunge into politics, raising money for Republicans from Wednesday through Friday at events in California, Nevada, Colorado and Missouri, sandwiched around other appearances to tout themes from his speech.

As for the Democrats, presidential candidate Hillary Rodham Clinton said, "Tonight is a red-letter night in American history. It is the last time George Bush will give the State of the Union. Next year it will be a Democratic president giving it."

Delivering the official Democratic response, Kansas Gov. Kathleen Sebelius urged Bush to work with Congress and help the U.S. regain global standing lost because of the war.

"The last five years have cost us dearly - in lives lost, in thousands of wounded warriors whose futures may never be the same, in challenges not met here at home because our resources were committed elsewhere," she said. "America's foreign policy has left us with fewer allies and more enemies."

Bush called for an effort to crack down on the pork barrel practices of Congress, saying he will veto any spending bill that does not cut in half the number and cost of congressional pet projects, known as earmarks.

The president planned to issue an executive order Tuesday ordering federal agencies to ignore earmarks that aren't explicitly enacted into law, erasing a common practice in which lawmakers' projects are outlined in nonbinding documents that accompany legislation. The move is aimed at making doubly sure that lawmakers have the opportunity to strike earmarks during floor debates.

However, Bush's plan leaves untouched the more than 11,700 earmarks totaling $16.9 billion that Congress approved last year.

He also said he would send Congress a budget that terminates or substantially reduces 151 "wasteful or bloated programs" totaling more than $18 billion.

He renewed a proposal to spend $300 million for a "grants for kids" program to help poor children in struggling public schools pay for the cost of attending a private school or a better public school outside their district.

On two issues that were centerpieces of State of the Union addresses past - Social Security and immigration - Bush passed the buck back to Congress, which had ignored the president's earlier proposals. Contending that entitlement spending is "growing faster than we can afford," he said, "I ask members of Congress to offer your proposals and come up with a bipartisan solution to save these vital programs for our children and grandchildren."

The president also:

* Announced a White House summit on inner-city children and religious schools.

* Said that his annual meeting with the leaders of Mexico and Canada will be held this year in New Orleans, to show off recovery efforts.

The president planned to issue an executive order Tuesday ordering federal agencies to ignore earmarks that aren't explicitly enacted into law, erasing a common practice in which lawmakers' projects are outlined in nonbinding documents that accompany legislation. However, Bush's plan leaves untouched the more than 11,700 earmarks totaling $16.9 billion that Congress approved last year.

He prodded Congress to extend a law allowing surveillance on suspected terrorists, renew his education law and approve free-trade pacts with Colombia, Panama and South Korea.